As the second policy debate between presidential contenders approaches, one may ask: Are you better off now than you were four years ago?
If that question determines who wins this election, then president Bush has the advantage over Sen. Kerry. But the more pressing question is whether or not the president will take the offensive in St. Louis this Friday night (when the conversation shifts to domestic policy), or be forced into defending some weak aspects of his policies over the last four years. Should he decide to take the offensive — highly recommended — here are some points that will go a long way toward confirming why he is, and will be, much stronger on domestic policy than his adversary:
Jobs. The idea that President Bush is in any way to blame for a loss of jobs during the past four years is ludicrous and points up a major weakness in Kerry’s strategy. If one were to ask why jobs were lost, one would find that accelerating productivity did more to erase jobs than anything else.
Never mind the fact that the terrorist attacks put many individuals out of jobs, some permanently. Even with these factors contributing to supposedly higher unemployment, continued low levels of inflation have been a boon to the balance of Americans who have experienced real gains in income due to productivity. Should we repeal these productivity advances to lower the unemployment rate and penalize the other 95 percent of Americans who are working?
Jobs II. The reported levels of unemployment are based on the Labor Department’s payroll survey — a survey of established businesses. However, the Labor Department’s household employment survey, largely overlooked by the mainstream media, provides a much brighter picture of employment.
As the U.S. shifts from a huge industrial-based economy to one that is driven by expanding family businesses, the employment center is shifting from big industry to “mom and pop” shops. On the basis of the household employment measure, we are a lot better off today than four years ago. Just a quick look at the following chart and you’ll know why the mainstream media keeps quiet about the household survey:
Tax Cuts. Bush signed his fourth batch of tax cuts in four years on Monday. The latest tax cuts encourage increased output and employment and give a break to small companies that really need tax breaks (since the income of these companies ends up as income to the owners who pay taxes on that income). Lower personal tax rates help these smaller companies employ more workers and are helping lower unemployment.
The Consumer. Lower inflation and lower interest rates over the past four years have done wonders for the consumer. Virtually anyone who owns a home has benefited from lower interest rates. Home prices have risen, benefiting the financial resources of homeowners, while lower interest rates have helped buyers of new homes. Zero interest rates on car loans have also benefited buyers of new cars.
To wit, my car loan interest rate at the end of the Carter administration was 21 percent and my mortgage rate was 14.75 percent. Those numbers did a lot to get Ronald Reagan elected. My mortgage is now 5.5 percent and my car loan would be zero percent if I hadn’t paid it off a long time ago. Why wouldn’t you vote for a president who presided over such a consumer-friendly economic environment?
Investment. For those who believe the stock market offers a glimpse of the future, the S&P 600 small-cap index has recently eclipsed all-time highs — another sure indicator of favorable changes in the economy.
Of course, I could go on. But I believe these are the central economic points that Bush should write into his offense for the second debate. If he stays on the field with these, he can give his defense some rest.
– Thomas E. Nugent is executive vice president and chief investment officer of PlanMember Advisors, Inc. and chief investment officer for Victoria Capital Management, Inc.